4 Tips to Maximize Your Crypto Investment

While buying and holding crypto assets is a popular option for beginner investors, there are other simple steps you can take to get a lot more out of your investment.

---

Cryptocurrency investment has grown substantially over the last five years, with 14% of Americans now holding digital assets in their portfolios, up from a reported 1% in 2016. Some industry leaders have predicted this figure could double by the end of 2021, after 13% of survey participants expressed intentions to purchase crypto over the next few months.

For many new investors joining the market, learning how to get the most out of your crypto assets is essential for reducing risk and maximizing any potential returns. Here are five useful tips to get you started.

1. Diversification
One of the easiest ways to reduce risk and, in some cases, help improve returns is by investing across a range of different crypto assets. This is known in the trading world as diversification, or asset allocation. The idea behind this is to spread your investments to average out losses if the market takes a downturn.

For example, Bob and Alice both invest $1,000 in cryptocurrencies. Bob decides to invest $100 across 10 different cryptocurrencies, while Alice decides to go all in on a single asset. Alice is running the risk that if the market turns bearish, and if the project she invested in takes a heavy hit, she could suffer heavy losses. Bob, on the other hand, has spread his risk and stands a better chance of losing less overall (depending on whether he’s invested wisely or not). This can also work when the market rises.

A common strategy is to select different types of cryptocurrencies to ensure you benefit when one of the many sectors experiences a surge. Conversely, it also spreads risk in case there’s a dip in one or multiple sectors.

Here are just a handful of examples of different cryptocurrency types:

Store of value: bitcoin (BTC, -0.63%) (BTC)
Non-fungible tokens, or NFTs: CryptoPunks
Smart contract technology: ethereum (ETH, 3.05%) (ETH)
DeFi: uniswap (UNI, 2.57%) (UNI)
Payment coins: litecoin (LTC, -0.22%) (LTC)
Privacy coins: monero (XMR, 3.48%) (XMR)
It is worth noting that although diversification aims to reduce risk or loss, it also has the potential to reduce your return on investment.

2. Copy trading
Copy trading, as the name suggests, is a type of investment trading where you automatically copy the trades of a professional investor. Platforms like eToro, Coinmatics and 3Commas are all examples of platforms that allow you to do this.

The setup is simple:

Select a trader to follow based on factors such as previous performance, number of followers and overall risk score (how risky are the invested assets).
Link your account to their movements.
When they choose to buy or sell a crypto asset, your portfolio automatically does the same.
This is a completely hands-free way to trade cryptocurrency without needing to study and track the market yourself.

Once you have settled on a trader (or traders), you can determine how much of your portfolio to allocate to each trader. Typically, this is in the form of a percentage of your balance. So if you have a balance of $1,000 to be invested, you could allocate 10% of your portfolio to copy trade one trader and 10% to another. This is another example of diversification and helps to spread out your funds and build a balanced portfolio. After you have finalized your investments, the trades will automatically start happening. Of course, you can always change traders or add more funds if they are doing well.

Just because they’re professional traders doesn’t mean they get it right every time. You cannot predict the success of a trader or the future movements of crypto assets so it is crucial to set up a loss limit. This is an automatic order that automatically stops your copy trading if you lose a predetermined amount or the value of an asset drops.

3. DeFi staking
This is where things start to get a bit more technical.

DeFi staking is a way of locking up your crypto assets in special, autonomous platforms known as “decentralized applications” in order to receive annual interest.

DeFi – or decentralized finance – is a sector of the cryptocurrency industry that takes traditional financial services like loans and insurance and puts them on the blockchain. The main difference being, the decentralized financial applications these services run on are not controlled or maintained by any single company. Instead, they are managed completely by their own communities of users and through automatically executing computer programs known as “smart contracts.”

Check out these articles if you’re unfamiliar with decentralized applications and smart contracts.

DeFi staking is a great way of generating an annual return on your deposited assets if you only plan on buying cryptocurrencies and holding them. The process is similar in nature to depositing money into a savings bank account except instead of earning less than 1% interest, you can typically earn anywhere between 5%-25% and in some cases, higher.

It is worth noting, however, that not all cryptocurrencies can be staked. A full list of supported staking assets can be found here. There are also some other risks to be aware of when dealing with DeFi platforms. These include:

DeFi platforms are not regulated. This means there are no consumer protections in place in the event you lose your capital from theft or fraud.
A number of DeFi platforms have not had their computer code audited by a third party to ensure there aren’t any bugs or exploitable flaws. This leaves the platforms vulnerable to hacks and exploits. So far in 2021, $361 million has already been stolen from DeFi applications.
It’s recommended anyone looking to lock away funds in a DeFi staking application should perform his or her own rigorous due diligence beforehand.

4. Learn to hedge crypto trades
What is hedging?
Hedging is a type of investment strategy aimed at reducing potential risk and losses incurred during adverse price movements in the market. It involves placing a primary trade in the direction you expect the market to go and then placing a second trade in the opposite direction. The idea here is, if the market goes against you the second backup trade you’ve placed will be in profit and offset the losses of your first trade.

A popular way crypto investors hedge their trades is by going long or short in the futures market. This is where two parties agree to trade a specific asset at a predetermined price and date.

Going long: Where you think the price of an asset will rise so you agree to purchase it at today’s price at a predetermined time in the future.
Going short: Where you think the price of an asset will fall so you agree to sell it at today’s price at a predetermined time in the future.
It’s important to know that trading futures is highly risky and should not be attempted by inexperienced traders. While it has unlimited upside potential (meaning there’s no cap on how much you can make), it also has unlimited downside potential. This means in some instances you can end up having to owe an exchange more than you initially invested. Stop-loss orders are advised to reduce risk when trading any asset. These automatically exit you out of a trade when the market price reaches a predetermined level.

Why would you hedge your crypto investments?
The crypto market is renowned for being highly volatile. This means the price of cryptocurrencies can change dramatically over a defined period of time. Bitcoin, for example, rose 125% between Jan. 1 to April 15, 2021, only to fall by 54% a few months later. Since the dip, prices are now up around 59%.

This unpredictability makes it incredibly difficult to know which direction the market will turn at any moment, meaning there’s a good chance the crypto assets you invest in won’t always go the way you want them to. Hedging provides peace of mind that whichever way the markets move, any losses suffered won’t be as severe.

The cryptocurrency space is constantly adapting and growing, providing ample opportunity to maximize your investments. These strategies are just a handful of ways to successfully stretch your funds and give you the greatest potential for a high return on investment based on the level of risk you are willing to tolerate. But it is also key to remember the golden rule for investing: If you are worried about the risk to your position, closing it or reducing its size is a safer option. And remember: Always invest and trade an amount you can afford to lose.




https://www.coindesk.com/learn/4-tips-to-maximize-your-crypto-investment/

Excellent dingy1688. Many thanks..

I am just literally starting out on Crytpo having signed up to coinbase about 6 weeks ago.
Not a big investment but have about £100 in there and so far enjoying messing about with it. Will add some more money over time.

LightyCollects wrote:I am just literally starting out on Crytpo having signed up to coinbase about 6 weeks ago.
Not a big investment but have about £100 in there and so far enjoying messing about with it. Will add some more money over time.

I'm thinking about a similar dabble, and reckon if you're going to try anytime best to get in now (I have - just about - finally got over passing over BTC when it launched at $1 each or whatever it was LOL ).

What's Coinbase, an exchange? Is it easy to get the hang of?

Can anyone advise what kind of wallet it's best to get?

Pm'd You kimchi and yes coinbase is best beginner and easy simplistic exchange. also when you start as i said here you can earn $30+ of random coins you can then swap for the coins you want.

and best wallet on market is https://trezor.io/
as found on amazon

Hello All
This has been really interesting, and I hope your forays into the world of cryptocurrency go well for you. My concerns about the crypto world are twofold:
Firstly, as Dingy1688 very fairly says, the market is very volatile, and I have heard it described as being more akin to gambling than investment. Many people gamble, enjoy doing so very much, and can show good profits. That's fine provided they only use spare cash and don't mind losing it. Problem gambling is an issue in other areas, and it's probably only a matter of time before the crypto market suffers from that too. Connected with this, in a way, is that crypto is totally unregulated and the market is not part of any compensation scheme should things go pear-shaped because of negligence or fraud, unlike mainstream financial investments. I'm not sure how widely that is understood among crypto investors - although obviously many will do so - and it's generally the more vulnerable who get sucked in and lose out because they haven't understood.
Secondly, and this may no longer be the case, my understanding is that the 'mining' of crypto assets uses phenomenal amounts of energy, which is very damaging environmentally.
So, all in all, crypto isn't an area that I would get involved in, but I can understand the attractions. I hope you all make a killing and laugh at me.
The Scaredy-Cat's Mother

Yep i completely agree
trading = gambling
wouldnt recommend it to anyone, nor have i any interest in it.
only ever long term investing which in past 4 years any investment in the 'big 4' is in the green



https://www.coindesk.com/markets/2021/06/17/mining-council-we-must-counter-misinformation-about-bitcoins-environmental-damage/

oh and coinbase and gemini are both regulated by financial authority NYSDFS but have no idea on others, i know binance got into bother in the UK regarding FSA

That's great - you obviously know what you're doing. There are too many people who don't - and I would be one of them.
I think we are reading from the same page, and I have found the posts in this thread very interesting.

Many thanks for that @The Cat's Mother! Mad 'conspiracy' talk follows!

I have always been VERY anti crypto, from when I missed out on $1 BTC to saying 'nah, don't want to touch that' when it was £600 (even though I knew it'd go much higher). I just don't trust the source of these 'anonymous' white papers, and what the ultimate endgame is for it all. To put it succinctly, I believe it's probably being set up so that when the financial crash comes the world governments will reset into a crypto (and block out all others) that tracks and traces everything, deducts taxes as soon as you earn, climate change tax when you start up your car, etc. This will be to sidestep the TRUE monies of gold and silver, which they've lost control of, and which in any case don't allow them the control they want over the citizenry, which will include a Social Credit system. So, it is like playing with the 'devil' for me.

That said, until a/the crash they are allowing people to make healthy headline profits to encourage people into it and be comfortable with the idea. It's almost reached the masses now in the UK, but not quite yet, so if you're going to get in with a little cash you can afford to play with (and are happy losing) then pretty much now is the time imvho.

There seem some fairly reasonable opportunities at the moment imho (if I can get my head round it all!). Oh and I completely agree that the unclued-up and vulnerable will be open to losing what they put in - I'd go further and say maybe eventually everyone will (which is why if I do dabble I will pull out what I can when I can).

Problem 'gambling' is really a problem in so many things imo. I do agree that it's likely here. I've heard 'talking heads' saying go ALL IN on crypto!    But then I've seen it with coins and silver and gold too.

The non-regulation is a great point, but we also have to bear in mind this is a large part of precisely why it (BTC at first) took off as something with utility - people using it for 'naughty' things on the dark web. In my understanding, it was useful as an 'untrackable' online payment option that didn't involve the banks or personal traceability (as such). However, I now understand that crypto without added layers of privacy has a permanent record, i.e. for all time, of every single transaction that it has ever been involved in. Cynics would say that's very useful indeed to tptb!

The main point though really I think is that the lack of regulation/central control is what got a lot of free-thinking folk and anti-central government types so passionate (evangelical almost) in the first place. If I'm right (big if!) then that's a cunning trick indeed...

With the compensation, yes there is none, but think about bank bail-ins and hyperinflation situations like Venezuala (personally I believe we are already teetering on the edge of hyperinflation)...do you get much back then? On the other hand if governments simply outlaw or legislate against cryptos it's all either gone or very heavily taxed. So it IS a huge gamble right now I'd agree. The dollar is being threatened (not just by cryptos by any means) and does anyone really think they would let it collapse without something else already primed to replace it? I don't, and this is my feeling with cryptos, has been since day 1. That said, another option would be to let other (Third World) currencies fail and then the overabundance of dollars moves in to 'soak' them up.

On the energy side I heard last night that mining gold now (not just the manpower and electricity involved but the damage of the chemical processes etc) is far more damaging to the planet than electricity from mining cryptos (can be done with solar). I've no idea of course if that's true, but worth thinking about for me.

Well, those are pretty much all my thoughts for now! Happy to be corrected on everything! Sorry for taking the topic off, and admins/mods please feel free to move this to a different thread if it'll start discussion (or more likely sidetrack it here!).

Has anyone else noticed I believe within the last 2 or 3 days you are now able to own Crypto on the Paypal app.
It is only the top 3 or 4 but yeah I was rather surprised to see Crypto on there.

kimchi wrote:

I have always been VERY anti crypto, from when I missed out on $1 BTC to saying 'nah, don't want to touch that' when it was £600 (even though I knew it'd go much higher). I just don't trust the source of these 'anonymous' white papers, and what the ultimate endgame is for it all. To put it succinctly, I believe it's probably being set up so that when the financial crash comes the world governments will reset into a crypto (and block out all others) that tracks and traces everything, deducts taxes as soon as you earn, climate change tax when you start up your car, etc. This will be to sidestep the TRUE monies of gold and silver, which they've lost control of, and which in any case don't allow them the control they want over the citizenry, which will include a Social Credit system. So, it is like playing with the 'devil' for me.


The main point though really I think is that the lack of regulation/central control is what got a lot of free-thinking folk and anti-central government types so passionate (evangelical almost) in the first place. If I'm right (big if!) then that's a cunning trick indeed...

With the compensation, yes there is none, but think about bank bail-ins and hyperinflation situations like Venezuala (personally I believe we are already teetering on the edge of hyperinflation)...do you get much back then? On the other hand if governments simply outlaw or legislate against cryptos it's all either gone or very heavily taxed. So it IS a huge gamble right now I'd agree. The dollar is being threatened (not just by cryptos by any means) and does anyone really think they would let it collapse without something else already primed to replace it? I don't, and this is my feeling with cryptos, has been since day 1. That said, another option would be to let other (Third World) currencies fail and then the overabundance of dollars moves in to 'soak' them up.

yep I completely agree - its more of a 'make hay while sun shines' thing personally

I believe it's probably being set up so that when the financial crash comes the world governments will reset into a crypto (and block out all others) that tracks and traces everything, deducts taxes as soon as you earn, climate change tax when you start up your car, etc.

Part of my reasoning for becoming involved in cryptocurrency was in the hope of understanding it well enough to avoid being forced to use the CBDC (Central Bank Digital Currency). -> https://www.silverdoctors.com/headlines/world-news/central-bank-visions-of-absolute-control/

They outlaw cash? Everyone should move onto Monero and makes things worse than ever for them. We need to flush these criminal tapeworms out of our systems and stop pandering to the very thing that is killing us, destroying our children's futures and removing any chance we'll ever have to fix this world before it's too late. One thing for sure is that THEY have all got their fingerprints somewhere in the scamdemic and will hopefully get roped in Nuremberg 2.0 trials.

I think everyone should at least try to wrap their head around using crypto now and learn how to use decentralised versions of it - especially Monero. I'm not excited about the prospect of crypto (Except perhaps Monero, Kinesis & Theta) ...but some of them are a better option right now than anything the criminal-elite are going to offer us.

it really depends what you want to achieve, which dictates what wallets and set up or products would be best to use... i would suggest not keeping all your eggs in one basket, be it with your portfolio, smart chain, platforms, wallets, etc.